With 30 years of experience, third-generation venture capitalist Tim Draper, founder of Draper University, a startup boot camp and accelerator, and one of the founders of DFJ, which invests in companies such as Tesla and Skype, knows what he’s looking for in an investment.
Draper gave us insight into his decision-making process during the first day of the Black Enterprise TechConneXt Summit at the BE Tech Talk: Investing in Millennial Tech Stars session. Sharing the stage with him was Sequoia Blodgett, an entrepreneur-in-residence at Draper University and the founder of 7AM, an online resource for personal development. Both appear on ABC Family’s Startup U, which follows a class of entrepreneurial millennials for a semester at Draper.
Here are five things that sway Draper, so if you’re a young tech startup looking for investment, ask yourself these questions first:
- Do I have “entrepreneurial verve?” “When we meet with the entrepreneur, it’s got to be bursting out of their chest,” Draper says. “It’s something they have to do.” You can’t just be in it for the money.
- Is it a big idea? Draper is looking for something transformative, something disruptive. “I’m looking for that next thing that’s way out there,” he says. And he always asks what big business it is going to piss off.
- Does it solve a problem? The best entrepreneurs can identify what isn’t working, many from experience, and they truly believe they can offer a better way. Draper says, “They see the problem and they believe they have the solution.”
- Is it good for the consumer? “The consumer should be the one that we care about the most. When industries get lazy, we’re all stuck with the monopoly provider, even though there are better solutions,” Draper says.
- Does it represent progress? Does the idea move society forward in some way? “We should be thinking about the threats to humanity. It’s entrepreneurs who ask the questions like, ‘how do we get to Mars?’”